We recognize that responding to climate change is one of our most important management issues, and in July 2021 we endorsed the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures)*. We will analyze the risks and opportunities that climate change poses to our business, reflect them in our management strategy and risk management, appropriately disclose our progress, and aim for further growth while contributing to the decarbonization of society as a whole. increase.
In addition, based on the TCFD recommendations, we will disclose “governance,” “strategy,” “risk management,” and “indicators and targets” for climate change below.
- * TCFD is an abbreviation for "Task Force on Climate-related Financial Disclosures". At the request of the G20, the Financial Stability Board (FSB) discloses climate-related information and changes climate. It was established to consider the response of financial institutions to. In June 2017, we published a recommendation to disclose the effects of climate change in financial reports of financial institutions and companies.
Governance
We recognize that the risks and opportunities associated with climate change will have a significant impact on our business strategies and financial plans, and in order to promote sustainability management across the entire group, we established the Sustainability Promotion Committee in June 2022.
The Sustainability Promotion Committee regards climate change as one of its main themes, and organizes information disclosure items in accordance with the TCFD recommendations, visualizes CO2 emissions, and formulates response methods and sustainability response policies. It also discusses progress on targets and measures and reports to the Board of Directors.
Additionally, as a supervisory body, the Board of Directors receives reports on sustainability-related issues, goals, and responses discussed by the Sustainability Promotion Committee, and makes decisions after deliberation as necessary.
Strategy
[Scenario analysis]
We recognize that the expansion of climate-related disasters, such as the intensification of typhoons and heavy rains, and global efforts to mitigate climate change, such as decarbonization, are important issues that will have a significant impact on our management and overall business. We conducted a scenario analysis to understand the risks and opportunities that climate change poses to our group and their impacts, and to consider the resilience of our group's strategy and the need for additional measures, assuming the world as of 2030.
As a result, it became clear that the key issues were keeping up with changes in consumer lifestyles, responding to climate change mitigation and adaptation, and responding to strengthened laws and regulations regarding carbon taxes and energy conservation.
The scenario analysis referred to multiple existing scenarios published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC), and assumed two worlds: the "1.5°C/2°C scenario," which assumes that the Paris Agreement's goal of "keeping the global average temperature rise well below 2°C above pre-industrial levels and making efforts to limit it to 1.5°C," and the "4°C scenario," which assumes that greenhouse gas emissions will continue at the current pace.
We selected IEA NZE 2050 for the "1.5°C/2°C scenario," in which transition risks such as strengthening climate change-related regulations, market changes, and consumer preferences become apparent, and IPCC's SSP5-8.5 and RCP8.5 for the "4°C scenario," in which physical risks such as natural disasters become apparent. Note that while the trends in risks and opportunities are the same in the 1.5°C and 2°C scenarios, we recognize that there is a greater need to strengthen the speed and level of response to climate change in the 1.5°C scenario than in the 2°C scenario.
The scope of the scenario analysis was based on a hypothetical world scenario for 2030, and covered the entire supply chains of eight Group companies involved in the home appliance, renovation, and logistics businesses, which are likely to be particularly affected by climate change.
Additionally, given that the effects of climate change may take a long time to become apparent, we have defined short-term, medium-term and long-term timescales.
Based on these two scenarios, we extracted climate-related risks and opportunities in line with the TCFD recommendations. We then identified transition risks (policy/legal regulations, technology, market, reputation), physical risks (acute and chronic), and opportunities (products and services) that are brought about by climate change.
| Reference scenario | 1.5/2°C Scenario: IEA NZE 2050 4℃ scenario: IPCC SSP5-8.5, RCP8.5 |
|---|---|
| Target business scope | Eight group companies related to home appliances, remodeling, and logistics businesses |
| Target year | Impact as of 2030 |
| Time axis | Based on the fact that the effects of climate change may become apparent over a long period of time, the short-term and medium- to long-term timelines are defined as follows.
・Short-term: Current ～ 1 year ・Mid term: 1 to 5 years ・Long term: 5 years ~ |
[Scenario analysis results]
As a result of the scenario analysis, we found that in both the 1.5℃/2℃ and 4℃ scenarios, failure to keep up with changes in consumer lifestyles and damage to our reputation due to delays in responding to climate change mitigation and adaptation are major risks for our corporate group. However, we believe that by building a business strategy that can quickly respond to both the 1.5℃/2℃ and 4℃ worlds ahead of our competitors through continuous scenario analysis, we can turn risks into opportunities.
For example, in the 1.5°C/2°C scenario, carbon taxes and strengthened regulations related to energy conservation are expected, which will lead to increased costs for our Group. As of 2030, the risk that will have the greatest impact on our finances is the increased costs due to the introduction of a carbon tax, which is expected to amount to approximately 1.7 billion yen.
However, as regulations on energy conservation and the conversion to zero-emission buildings progress toward decarbonization, regulations on greenhouse gas emissions are strengthened, and we respond to the accompanying changes in social awareness, we believe that the growing demand for products with high energy efficiency and low greenhouse gas emissions also represents an opportunity for our corporate group, which operates home appliances and renovation businesses.
In the 4°C scenario, natural disasters will become more severe, resulting in damage from disasters, and supply chain disruptions will cause delivery delays, resulting in lost sales opportunities. However, as the average temperature rises, energy consumption by air conditioning equipment will increase to keep the temperature and humidity constant within the company, and air conditioning costs are expected to increase. We believe that the growing demand for energy-efficient air conditioning equipment will also be an opportunity for our corporate group.
By identifying the impact of climate-related risks through this scenario analysis and considering countermeasures, the Group aims to reduce business risks, realize opportunities for value creation, and ensure sustainable and stable profits over the long term.
Our main risks and opportunities are as follows.
Identifying risks and opportunities posed by climate change
Risk management
【Risk management】
Our company has established the Risk Management Regulations that define the basic policy and management system for risk management for the entire group. Based on these regulations, we have established a Risk Management Committee to comprehensively manage the risks surrounding our group companies.
The Risk Management Committee verifies the importance of risks by identifying risks that could have a negative impact on the Group's business and evaluating the degree of impact and likelihood of occurrence of those risks. In addition, it determines management targets and specific measures for anticipated risks and continuously monitors their progress. The status of risk management is reported to the Board of Directors.
The Sustainability Promotion Committee evaluates and manages risks and opportunities related to climate change, such as CO2 emission regulations. It manages company-wide climate change risks and opportunities, and also deliberates, decides, and reports to the Board of Directors on methods for identifying, evaluating, and managing risks and opportunities. Identified climate change-related risks are classified into "transition risks" and "physical risks," and the financial impact of the risks and opportunities is evaluated. After identifying significant risks and opportunities, the committee consults with the Risk Management Committee and considers countermeasures.
is.
[Initiatives and responses based on risks and opportunities]
Based on the results of the scenario analysis, our corporate group is strengthening our efforts to decarbonize our store facilities and business activities. In our stores, we aim to operate in a way that reduces CO2 emissions. We are promoting the use of renewable energy through the installation of solar power generation equipment, introducing energy-saving equipment such as LED lighting, and working on energy control through the installation of the energy management system "BEMS" and air conditioner efficiency panels. In our business activities, we are also actively working to realize a decarbonized society by providing energy-saving products and services to customers, such as by installing electric vehicle charging stations in our on-site parking lots. We will continue to research energy-saving efficiency in our stores and work to strengthen our efficient store systems that are considerate of the environment.
One of the goals of reducing the costs of responding to the strengthening of regulations envisaged in the 1.5°C scenario is to install self-consumption solar power generation equipment, switch to energy-efficient lighting and air conditioning equipment, and introduce demand response (DR) contracts when it is time to renew facilities, replace tenants, or open new stores.
In addition, as part of our energy-saving and power-saving initiatives at our directly-operated electronics stores, we are working to reduce CO2 emissions by turning off lights in pylons and on exterior wall signs, setting the temperature of in-store air-conditioning equipment, properly cleaning air-conditioning filters, promptly turning off in-store lights, and turning off some of the display items, among other things. These efforts are contributing to a reduction in the total amount of Scope 1 and Scope 2 CO2 emissions by reducing electricity and gas usage.
In addition, we are promoting the acquisition of ZEB certification for new construction and renovation work on existing stores. In order to achieve sustainable store operations, we are working on thorough energy conservation and energy creation, and both our Gifu Masaki store and Katano Hoshida store, which obtained "Nearly ZEB" certification in 2023, have succeeded in reducing annual primary energy consumption by 25% or less through energy conservation and energy creation.
In the home appliance and renovation business, which accounts for more than 80% of the Group's Net sales, the Group is taking the opportunity to actively promote sales of highly energy-efficient home appliances, home solar power generation equipment, and high-insulation renovations, and is promoting the increase of employees with broad expertise in the field of energy conservation through qualifications and training such as home appliance advisors and smart masters at each store nationwide. This initiative contributes to reducing CO2 emissions in Scope 3 Category 11 (use of sold products) and Scope 3 Category 1 (purchased products and services) through the supply chain. In addition, some of the logistics service centers reduce the volume and recycle polystyrene foam discharged during product delivery, which reduces the number of transport vehicles to 1/20 of the usual number, reducing CO2 emissions in Scope 3 Category 4 (transportation and delivery).
To reduce damage and response costs associated with the intensification of natural disasters envisioned under the 4°C scenario, we are preparing a system to respond to risks, such as by conducting disaster prevention drills to be able to respond quickly, assuming the risk of flooding and inundation, and damage from flooding due to torrential rain. In addition, to minimize the risk of flooding in our offices and stores and damage to home appliances due to flooding in the event of record-breaking heavy rains or torrential rains, we are installing drainage pumps in some stores and carrying out waterproofing work on rooftops and parking lots. Going forward, we will continue to make appropriate plans and thoroughly prepare for natural disasters through repairs, operations, training, and the use of external information.
Indicators and targets
[Indicators and targets]
We have set Scope 1, 2, and 3 CO2 emissions as indicators for managing climate-related risks and opportunities. We aim to reduce the total CO2 emissions of our Group's Scope 1 and Scope 2 by 46% compared to fiscal 2013 by fiscal 2030, and we expect to reduce the total CO2 emissions of Scope 1 and Scope 2 by 39% compared to fiscal 2013 in fiscal 2023. We will consider the reduction target for Scope 3 CO2 emissions in the future. In addition, as a long-term goal, we will continue to take various measures to contribute to the realization of a carbon-neutral society.
[CO2 emissions (Scope 1, 2, 3)]
We are working to calculate the CO2 emissions of the entire group in our business activities. Our group's Scope 1 and 2 CO2 emissions for fiscal year 2023 are expected to be approximately 119,222 t-CO2e. Our Scope 3 CO2 emissions for fiscal year 2023 are expected to be approximately 10,565,795 t-CO2e. The trends in our group's Scope 1, 2, and 3 CO2 emissions are as follows:
< EDION Group Scope 1 and 2 CO2 Emissions Results and Outlook>
(Unit: t-CO2e)
| Fiscal Year 2013 Base year | 2021 | 2022 | 2023 Preliminary figures | FY2023 vs. FY2013 (reduction rate) | |
|---|---|---|---|---|---|
| Scope 1 Company direct emissions (Gas, petrol, diesel, etc.) | 28,961 | 21,108 | 20,273 | 18,980 | 66%(△34%) |
| Scope 2 Supplied by other companies Indirect emissions (electricity, etc.) | 166,542 | 93,705 | 85,470 | 100,242 | 60%(△40%) |
| Scope 1 + Scope 2 Total | 195,503 | 114,812 | 105,743 | 119,222 | 61%(△39%) |
- * Applies to the filing company and consolidated subsidiaries.
- *The scope of calculations is being revised from fiscal 2023, and values for previous years have been retroactively revised.
- * Market standards are used for Scope 2. The CO2 conversion factor for electricity uses the adjusted emission factors for each electric power supplier published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry each year, and Scope 2 emissions in fiscal 2023 are expected to increase due to the impact of the emission factors.
- * If figures are rounded, the total may not necessarily equal the sum of the figures.
< EDION Group Scope 3 CO2 Emissions Results and Outlook>
(Unit: t-CO2e)
| 2013 | 2021 | Fiscal Year 2022 Base year | 2023 Preliminary figures | FY2023 vs. FY2022 (reduction rate) | |
|---|---|---|---|---|---|
| Scope 3 Indirect emissions in the value chain other than Scope 1 and 2 | 61,780 | 36,976 | 10,624,918 | 10,565,795 | 99%(△1%) |
- * Applies to the filing company and consolidated subsidiaries.
< EDION Group Scope 3 Breakdown by Category>
(Unit: t-CO2e)
| Scope 3 Category/Fiscal Year | 2013 | 2021 | Fiscal Year 2022 Base year | 2023 Preliminary figures | Composition ratio within Scope 3 categories in the most recent fiscal year |
|---|---|---|---|---|---|
| 1. Purchased Products and Services | 27,064 | 11,467 | 2,100,553 | 2,108,690 | 20.0% |
| 2. Capital Goods | ー | ー | 21,041 | 71,604 | 0.7% |
| 3. Not included in Scope 1 or 2 Fuel and Energy Activities | 19,970 | 12,609 | 14,422 | 14,551 | 0.1% |
| 4. Transportation and delivery (upstream) | ー | ー | 48,160 | 48,150 | 0.5% |
| 5. Waste generated from business operations | 14,746 | 12,900 | 23,641 | 21,313 | 0.2% |
| 6. Business trips | ー | ー | 1,212 | 1,200 | 0.0% |
| 7. Employee Commuting | ー | ー | 5,077 | 4,959 | 0.0% |
| 8. Leased assets (upstream) | ー | ー | 0 | 0 | 0.0% |
| 9. Transportation and distribution (downstream) | ー | ー | 887 | 1,091 | 0.0% |
| 10. Processing of sold products | ー | ー | N/A | N/A | ー |
| 11. Use of sold products | ー | ー | 8,306,605 | 8,189,305 | 77.5% |
| 12. Disposal of sold products | ー | ー | 85,201 | 85,404 | 0.8% |
| 13. Leased assets (downstream) | ー | ー | 7,840 | 9,121 | 0.1% |
| 14. franchised | ー | ー | 9,910 | 10,037 | 0.1% |
| 15. Investment | ー | ー | 370 | 370 | 0.0% |
| Scope 3 Total | 61,780 | 36,976 | 10,624,918 | 10,565,795 | 100.0% |
- * Calculations were performed for all Scope 3 categories in fiscal year 2023, and retroactive calculations were performed for all categories for fiscal year 2022.
- * If figures are rounded, the total may not necessarily equal the sum of the figures.